Over the past decade, the media industry has been upended by the transition of consumers to streaming platforms, leaving legacy media giants scrambling to adapt and find ways to thrive in this new landscape. These dynamics have led to endless consolidation talks and further shake-ups among the largest media companies.
Since the beginning of the year, FilmTake has explored the challenges and opportunities facing the leading streamers.
How Warner Squandered its Position as Industry Leader
It’s difficult to overstate the disastrous few years WBD has experienced under inept leadership. Boosting one of the most desirable film and television catalogs, the company has stumbled over every vital decision since 2020.
First, Warner Bros. was the last major studio to enter the streaming scene, launching HBO Max in May 2020 before rebranding it as Max in May 2023. Other major studios had been in the game for years: Hulu started in 2009, Paramount started operating CBS All Access in 2014, Disney+ debuted in 2019, and Peacock launched a month before HBO Max in April 2020.
Next, amid widespread theater closures related to government-imposed lockdowns, Warner Bros. dealt a heavy blow to the traditional theatrical model in 2021 by dumping its entire 17-film slate onto its struggling HBO Max streaming platform. These films were released simultaneously in limited theaters permitted to stay open in non-lockdown states.
Following several streaming missteps, Warner Bros. tossed aside one of the most recognizable brands of the last fifty years when it renamed HBO Max to simply Max. This decision will likely become a case study in marketing courses for decades, illustrating a notable failure in brand management.
Sizable Subscriber Losses Show No Sign of Slowing
WBD lost 400,000 domestic subscribers from its Max streaming service in the fourth quarter of 2023, ending with 52 million, compared to 54.6 million domestic subscribers in the same quarter a year ago.
This subscriber loss was at least an improvement from the third quarter of 2023 when WBD shocked the market by reporting a loss of 700,000 subscribers in its direct-to-consumer (DTC) segment, which includes HBO cable subscriptions and the Max and Discovery+ streaming services.
WBD’s recent follies are not just limited to severe theatrical and streaming missteps but to its cash cow. After decades of releasing the most popular series content, HBO suffered a significant blow to its live channel viewership, plummeting by 34% in 2023, marking a steep decline from the previous year.
While many cable television networks experienced a decline in viewership, HBO bore the brunt of the impact, enduring one of the most severe drops.
Despite the company’s disastrous performance in transitioning into the streaming business, horrendous content decision-making, and its stock falling over 40% in the last twelve months, its CEO remains the highest paid in media.
Add real-world pricing context to this film and television market analysis.
FilmTake’s Global Rights Suite combines both the Film Licensing Index and Film Advance Index into one rights-pricing package for film and television executives evaluating licensing and streaming values, Pay-1 economics, minimum guarantees, presales, and international advance structures.
Warner’s Murky Financial Future Amid Slowdowns
WBD managed to curtail its DTC losses to a still significant $55 million in the fourth quarter, though slightly improving from the staggering $217 million loss recorded in the fourth quarter a year ago.
Through a sleight of hand, WBD achieved $103 million in “profitability” in its DTC segment by blending HBO PayTV subscriptions with its streaming financials.
Despite some improvement in the company’s streaming business, its traditional cable network segment suffered a notable setback, with revenue plummeting by 11% to $2.2 billion. Likewise, advertising revenue experienced a significant decline, dropping by 12% to $1.9 billion. Overall, WBD finished 2023 with a net loss of $3.1 billion on revenues of $41.3 billion.
Although the company boasted an uptick in global DTC figures, climbing to 97.7 million from 95.9 million in the third quarter and 96.9 million a year ago, the overall financial picture remains bleak.
The global average revenue per subscriber (ARPU) increased marginally to $7.94 per month from $7.88 in the third quarter and $7.42 a year ago. Meanwhile, domestic ARPU saw a slight rise to $11.65, up from $11.29 in the third quarter and $10.83 a year ago.
WBD executives are quick to blame 2.5 million lost subscribers on a light content slate and overlap in Discovery+ and Max subscribers. Certainly, WBD has been producing far fewer noteworthy shows and films than in its heyday, but any overlap between Discovery+ and Max subscribers is overstated.
Warner’s recent financials reflect the broader challenges in the media industry, particularly the uncertain advertising market, which has buoyed many bloated studios for decades.
WBD Reverts to Licensing Films and Shows to Boost Shrinking Revenue
WBD’s recent subscriber losses highlight the intense competition in the streaming space as subscribers bounce from service to service. Their strategy shift from exclusive content to reembracing third-party licensing reflects the industry’s recognition of the limitations of a walled-in approach.
At the beginning of the year, Warner opened negotiations with Netflix to offer some of its popular films and shows. This content includes not just older HBO series content but also recent blockbuster films. Modern hits like “Dune” are streaming again on Netflix, and popular HBO shows are starting to stream despite their prior exclusivity or close association with Max.
Likewise, shortly after removing programs from Max to harvest tax write-offs and reduce in-house licensing costs, WBD quickly pivoted to licensing the content to Fox Corp.’s Tubi and Roku, which are FAST services. This move enabled them to tap into fresh revenue streams for their content while reducing costly DTC liabilities.
In recent months, more original HBO and Max content has been removed and is bound for competing streaming services like Netflix, most notably several popular sci-fi dramas.
FilmTake Away: Netflix, the Pied Piper of Streaming Leads Hollywood Astray
Legacy media companies rushed to emulate Netflix, uncertain of the model’s effectiveness. Driven by the urgency to meet evolving consumer preferences, they inadvertently drained their primary sources of revenue. Consequently, the industry now finds itself engulfed in turmoil.
Currently, WBD finds itself amidst disjointed reorganizations, resorting to severe cuts in jobs and content expenses as it desperately attempts to cobble together profits through various means as investors flee.
Streaming licensing is becoming more selective as platforms price films by window, territory, exclusivity, performance history, and platform utility. The market has not stopped buying films, but buyers now need clearer economic justification for each rights acquisition.
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Continue Reading Netflix’s Cannes Buying History Shows What Streamers Want
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Continue Reading Cannes 2026: Prestige Is Still Powerful, But Buyers Want Proof
The Global Rights Suite combines FilmTake’s Film Licensing Index and Film Advance Index into one integrated rights valuation package, pairing downstream SVOD, Pay-1, and multi-window licensing benchmarks with upfront minimum guarantee, advance, and acquisition pricing.
The Film Licensing Index provides structured pricing benchmarks for film licensing, covering SVOD, Pay-1, second-window, re-run, library, and DTV pricing frameworks across major markets, windows, territories, and performance tiers.